Radio firms mull legal challenge to Ofcom in digital row

A dispute has broken out between leading players in the radio industry and the media regulator Ofcom over the future development of digital radio.

GWR, the radio group that has been most enthusiastic about the development of digital radio, is especially angered by the prospect of its rivals being allowed to get their hands on digital national radio franchises even though they passed up the opportunity the first time.

According to Ofcom's critics, led by GWR, the regulator's latest proposals for digital radio will tear up an agreement under which one commercial consortium, Digital One, says it was granted a "sole" licence in 1998 to operate national digital services.

Ralph Bernard, the executive chairman of GWR, which owns the majority of the Digital One national service or "multiplex", said legal action over Ofcom's proposed creation of a second national multiplex was "an option". GWR argues that it bid for the national service on the basis that it would hold an exclusive asset.

"Ofcom would be breaking a commitment that was utterly clear and completely unequivocal, which led to us and others investing millions and millions of pounds," Mr Bernard said.

Ofcom has finished consulting the radio industry on its "Radio - Preparing for the Future" document and the responses of the industry have just been made public.

Some radio groups are also concerned that the regulator's plans - outlined in a consultation paper - would not allow enough spectrum for all existing analogue stations to broadcast digitally. In addition, Ofcom was criticised for not envisaging that radio would follow television in going digital-only.

The regulator identified five additional blocks of spectrum that it plans to allocate for digital radio services. According to Ofcom's document, it proposes to allocate three blocks of the spectrum to fill gaps in local digital coverage. It is also "minded" to allocate "one or two" blocks for national use - that is, to create a second commercial national multiplex.

GWR's hostility to this idea is endorsed by its merger partner Capital Radio, which said that another national multiplex would take business from local multiplexes and make some of them unviable.

The dispute has split the radio industry, with the other two big players, Chrysalis and Emap, clearly in favour of the creation of another national multiplex. Chrysalis and Emap do not have slots on the existing Digital One multiplex and did not invest in its creation. According to Mr Bernard, now that they have seen that digital radio can be a success, they want a better position in the market.

"The only reason Chrysalis and Emap want more national multiplexes is that they want to try to find a way of peeking at the pie that someone else has cooked. They weren't even prepared to go into the kitchen at the time," Mr Bernard said.

Quentin Howard, the chief executive of Digital One, said that about £30m had been invested so far in the venture. He said that creating another national platform would swamp the market at a time when existing national digital stations were years away from profitability. He said that Digital One was promised a national monopoly running for "at least" 12 years from 1999.

A spokeswoman for Ofcom said it proposed to have at least one local multiplex in each area, capable of carrying eight stations. She admitted that once that multiplex was full, remaining local stations would have no way of going digital.

Mr Bernard said: "You can't say that we have gone digital until all local stations can find a way of broadcasting digitally. Otherwise you confine a significant number of stations to an analogue backwater and take choice of digital stations away from consumers."

By contrast, Chrysalis said that digital radio was "naturally a national platform".